Relentless market pressure pushes Spain closer to bailout

(Reuters) – Spain paid the second highest yield on short-term debt since the birth of the euro at an auction on Tuesday, reflecting a growing belief that the country will need a full sovereign bailout that the euro zone can barely afford.

Spain’s increasingly desperate struggle to put its finances right has seen its borrowing costs soar to levels that are not sustainable indefinitely. Italy, commonly regarded as too big to bail out, has been dragged along in its wake.

The Spanish Treasury raised 3.04 billion euros ($3.7 billion) of 3-, and 6-month T-bills, meeting its target. The average yield on the 3-month bill was 2.434 percent, up from 2.362 in June. For the six-month paper, the yield jumped to 3.691 percent from 3.237 percent last month.